"We haven't seen the uptick in inflation that would normally fuel a backup in the back end of the curve, but the market may be thinking it's only a matter of time," said Craig Bishop, vice president of U.S. fixed income at RBC Wealth Management.
The Fed announced its third quarter-point increase to the federal funds rate in September.
"If you go back to the September FOMC meeting — and subsequent comments from Fed officials — it all combines to send a message that a December hike is on the table," Bishop added. "There's even some question as we look ahead if we're going to get four hikes in 2019."
The S&P 500 hasn't posted a single positive day since Wednesday as investors fear rates are rising too far, too fast, threatening to derail the economy. Attractive yields can also push investors away from the riskier equity market and into the relatively benign Treasury market.
"Conventional wisdom holds that rising rates threaten equity valuations. ... The question, then, is at what point rising rates become a burden," wrote Jonathan Golub, chief equity strategist at Credit Suisse.
The Treasury Department is set to auction $36 billion in three-year notes and $23 billion in 10-year notes on Wednesday; it is slated sell $15 billion in 30-year bonds on Thursday.
The U.S. government's decision to cut taxes and increase spending over the past year is fueling an economy as a deluge of debt issuance from the Treasury Department hits the markets.
In its quarterly refunding statement in August, the Treasury said it will be adding another $1 billion a month to each of the auctions for two-, three- and five-year notes over the next three months.
The moves came as the government scrambles to handle a budget deficit expected to eclipse $1 trillion in the next two years. The national debt is at $21.6 trillion, having risen about $1.1 trillion in 2018.
Key inflation data, including the producer price and consumer price indexes are due Wednesday and Thursday, respectively.
WATCH: Mixed open as rates dampen sentiment